Correlation Between Svenska Handelsbanken and Alimak Hek

Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Alimak Hek at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Svenska Handelsbanken and Alimak Hek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Svenska Handelsbanken AB and Alimak Hek Group, you can compare the effects of market volatilities on Svenska Handelsbanken and Alimak Hek and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Svenska Handelsbanken with a short position of Alimak Hek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Alimak Hek.

Diversification Opportunities for Svenska Handelsbanken and Alimak Hek

0.87

Correlation Coefficient

Svenska Handelsbanken  Alimak Hek

Very poor diversification

The 3 months correlation between Svenska and Alimak is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Alimak Hek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimak Hek Group and Svenska Handelsbanken is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Svenska Handelsbanken AB are associated (or correlated) with Alimak Hek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimak Hek Group has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Alimak Hek go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Alimak Hek

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 1.09 times more return on investment than Alimak Hek. However, Svenska Handelsbanken is 1.09 times more volatile than Alimak Hek Group. It trades about 0.14 of its potential returns per unit of risk. Alimak Hek Group is currently generating about 0.11 per unit of risk. If you would invest  13,660  in Svenska Handelsbanken AB on December 30, 2024 and sell it today you would earn a total of  2,700  from holding Svenska Handelsbanken AB or generate 19.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Svenska Handelsbanken AB  vs.  Alimak Hek Group

Svenska Handelsbanken

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Svenska Handelsbanken unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alimak Hek Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alimak Hek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Svenska Handelsbanken and Alimak Hek

The main advantage of trading using opposite Svenska Handelsbanken and Alimak Hek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Alimak Hek can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alimak Hek will offset losses from the drop in Alimak Hek's long position.

The idea behind Svenska Handelsbanken AB and Alimak Hek Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.